Yesterday I finished my course on Monetary Theory and Policy for this year’s 1st year PhD students at Stanford. I have been teaching in the 1st year PhD core for a long time and it gets more interesting each year. (Technically speaking I first taught in the 1st year graduate course in 1968 as a student at Stanford. Lorie Tarshis, author of the first Keynesian textbook, was the professor, and he asked me to give the lecture on dynamic stochastic models of the business cycle saying he did not know much about it.)
Of course the lectures have changed enormously over the years, especially during the 1970s and 1980s with the emergence of new Keynesian modeling (rational expectations with sticky prices). But the past few years of crisis and slow recovery have also seen big changes, for example, bringing in preferred habitat or affine equations for the term structure to the macro models in order to assess quantitative easing and forward guidance. But I also teach that the basic macro models are still ok and that it was policy what went off track leading up to the crisis.
For the past two years I have been assigning and discussing some of Janet Yellen’s work such as this April 2012 talk relating to policy rules, so little update was required there—simply deleting Vice in Vice Chair as in the attached slide from lecture one. I’ll be posting revised versions of all the lectures on my web page soon.